The European Insurance and Occupational Pensions Authority published its July 2025 Insurance Risk Dashboard, based on Q1 2025 Solvency II data and end-June 2025 market data, and assesses risks in the European insurance sector as stable at a medium level. It nevertheless points to a negative outlook over the next 12 months in some areas, driven by geopolitical tensions, uncertain trade dynamics and market volatility. Macroeconomic and credit risks are assessed as stable at medium levels, supported by high credit quality and largely unchanged investment allocations, while market risks remain a key concern due to fixed income volatility and a potential disconnect between equity valuations and fundamentals. Liquidity and funding risks are stable but show mixed signals, combining improved cash flow sustainability with weaker liquid asset ratios and persistently high lapse rates; solvency and profitability indicators remained resilient in early 2025 with strong capitalisation. Insurance-specific risks are also stable at medium, underpinned by year-on-year premium growth and an improved Q1 2025 loss ratio, while ESG risks are stable but trending upward and cyber and digitalisation risks are becoming more prominent due to higher perceived incident likelihood and IT vulnerability concerns. The dashboard draws on reporting from 96 insurance groups and 2,116 solo insurance undertakings and concludes that close monitoring is warranted as geopolitical, market and operational risks evolve.

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